Israeli tanks and troops moved into northern Gaza today after Palestinians fired two rockets at an Israeli town for the first time, completing a day of attacks, raids and reprisals.

The army had responded to attacks that killed five Israelis yesterday by hitting back with warplanes, ships and tanks. Later, Palestinians hit an Israeli town near Gaza with small, unguided Qassam rockets.

Two infants were wounded in the attack on Sderot, Israeli officials said.

Israel has said firing rockets at their settlements would evoke a harsh response. The home-made rockets were launched from Beit Hanoun, in the northeast corner of the Gaza Strip.

In southern Gaza, Israeli tanks entered Karrara village near Khan Younis, witnesses said. Three Palestinians were killed by tank fire, according to doctors. The Israelis destroyed the house of a militant and damaged several others before withdrawing.

Also, Israeli tanks moved into a neighbourhood at Gaza City's eastern edge and tore down Palestinian checkpoints, witnesses said, and other tanks moved towards the Rafah refugee camp. The camp, on the Gaza-Egypt border, is the scene of frequent clashes and house demolitions as Israeli forces try to stop arms smuggling.

Israeli navy gunboats fired at a Palestinian base on the coast north of Gaza City, witnesses said. One Palestinian policemen was killed and two others were injured when a shell hit their car, doctors said. Ships also fired at Arafat's seaside Gaza headquarters, witnesses said. Arafat is confined to the West Bank town of Ramallah by Israeli forces.

In Washington, State Department spokesman Richard Boucher said the US is "deeply troubled by the escalating violence in the Middle East. We have urged both sides to do all they can to bring it to an immediate end."

However, Boucher said there were no plans to send mediator Anthony Zinni back to the region. In two previous trips, Zinni failed to secure a truce.

Israeli Prime Minister Ariel Sharon yesterday convened senior ministers to discuss strategy. The government said Sharon decided to postpone next week's to Spain and Britain "in light of recent events."